Hockey's Privatisation Rhetoric

Within the course of a week, the man pulling the nation's purse strings moved from promoting the cause of privatisation and foreign investment - with a policy to encourage state government sales of ports, electricity networks and other public assets - to blocking an American purchase of GrainCorp, arguing it was not in the national interest.

It seems the inherent contradictions were lost on the Treasurer, with political expediency and public pressure drivers of his decision-making rather than informed, fact-based analysis.

At the same time, our privatised national aviation carrier, Qantas, has not only called for urgent political assistance as it struggles to compete with state-owned overseas airlines, it has announced the axing of 1000 jobs.

Neither Prime Minister Tony Abbott, who indicated a willingness to examine measures such as the government buying back a stake to ensure Qantas remained an "Australian icon", nor Mr Hockey, who said such action could come at a cost to taxpayers, seemed in the slightest bit phased by this latest example of the failures of past Australian privatisations.

Instead, Mr Hockey will push ahead with his plan at the Council of Australian Governments meeting later this month. His pitch - primarily aimed at NSW and Queensland where the public power networks and some generators have been retained - is that if the community wants investment in productivity-raising infrastructure projects, it must accept the offloading of profit-making public assets to fund it.

While much has been made of the carrot - federal government tax incentives that will offset part of the lost income by redirecting corporate tax to the states - this money will cover barely a quarter of the lost income.

Data from the NSW Auditor-General reveals that total government revenue from the electricity network from dividends, tax equivalents and interest totalled $2.5 billion last financial year. Under Mr Hockey's plan that state would get just $700 million, a net loss of almost $2 billion a year.

Far from being a burden on the public, electricity network businesses have been consistently profitable, providing a substantial ongoing windfall to states such as NSW that have retained ownership of them. While there have been some fluctuations, the relative profitability of energy generator and network businesses has increased steadily across the country.

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